Answer :
Solution :
At every stage the formula used will be :
[tex]$\frac{\text{available balance}}{(1+\text{interest rate})}= \text{required bank balance}$[/tex]
After the junior year, Aunt Mabel's bank balance will be :
[tex]$=\frac{8000}{1.0925}$[/tex]
= $ 7,322.65
Aunt Mabel's bank balance after sophomore year will be :
7,322.65 + 1000 = $ 8,322.65
[tex]$=\frac{8,322.65}{1.0325} $[/tex]
= $ 8060.677
After the freshman year, bank balance of Aunt Mable's will be :
8060.677 + 6000 = $ 14,060.677
[tex]$=\frac{14,060.677}{1.0250} $[/tex]
= $ 14.0606
If Aunt Mabel can predict the interest rate with accuracy, she will have to deposit :
$ 14.0606 + $ 9000 = $ 9,014.06
[tex]$=\frac{9014.06}{1.0525}$[/tex]
= $ 8,565.241